The contemporary economic policies of IDB member countries envisage a significant role for the private sector in their economic development. As a measure of its contribution to development, the private sector is estimated to share more than 60% of the Gross Domestic Fixed Capital Formation in IDB member countries.

In terms of size, the private sector in IDB member countries varies from the micro and small-scale, which primarily belongs to the informal sector, to medium and large-scale enterprises. At the country level, there are considerable differences in the characteristics of private sectors in various member countries. At one end, there are well-established, dynamic private sectors characterized by a diversified structure of enterprises of all sizes and growing capital markets. And at the other end, there are the growing private sectors characterized by small-scale businesses concentrated in the informal and agricultural sectors, together with a handful of foreign-owned entities.

On a broader scale, looking at the overall proportionate share of the private sector in Gross Domestic Fixed Capital Formation for the whole world, it increased from 74.7% in 1980 to 76.9% in 1997.

In the light of these trends, governments in developing countries have sought to expand their private sectors with a view to benefit from the tangible gains of globalization. Similarly, many IDB member countries have adopted broad policy reforms in the areas of liberalization of prices, removal of exchange controls and trade restrictions, and rationalization of government tariffs, thereby creating a more favorable environment for private sector investment.